A Healthy Stream of Capital

RSF’s purpose is “to transform the way the world works with money,” but what exactly does that mean? In pondering this question, I recalled time spent outdoors exploring a particular creek. I realized there was a metaphor in the story of that creek for a transformed financial system.

Last summer, with my family, I visited Filigreen Farm, a diverse Demeter certified Biodynamic fruit farm in Mendocino County. One morning, my mother-in-law, Joellen, and I set out to tromp through the creek that bisects the farm. This creek, the Anderson Creek, is a major tributary feeding into the Navarro River and to the Pacific Ocean twenty miles away.

In the year that had passed since my last visit, the creek had changed. The water was deeper in some places, but there were also more sandbars. Standing up to our knees in cool, clear and slow moving water we marveled at dark pools of circling fry, audible frogs, and lush vegetation. We lingered in shallow water searching for captivating treasures.

By the time the sun was directly over our heads, we were ready to head back to the cool shade of the house, but with willows, shrubs, and grasses crowding the creek banks and islands, we could see no obvious path to the farm on the other side.

When we finally emerged, we ran into Stephanie Tebbutt, one of Filigreen’s managers. We thanked our host, and Joellen commented on what great fun she had in the creek. This creek, Joellen said, struck her as particularly beautiful; she had not seen a stream as clear as this one since she was a child on her family’s farm in Nebraska.

When Stephanie and her husband Chris, both landscape designers, first came to Anderson Valley in 1982, “the stream looked nothing like its present self: curving, clear, and about twenty feet further back from its former location,” Stephanie said. “It looked like others up and down the Anderson Valley: straight, denuded of vegetation. The landowner at that time had bulldozed the creek each autumn to straighten it, clearing any vegetation brave enough to rear its head along the way. What little survived was grazed down by the cattle.” The practice had eroded the farm land, sending topsoil down to the sea, creating a steep cut bank, and facilitating spring flooding.

Lush landscape and Filigreen Fram

Together the Tebbutts set out to stabilize the creek bank. Bringing the natural rhythm and energy back to the water would be the key to the riparian restoration. “Water is not meant to flow in a straight line,” Stephanie said. “There are unintentional consequences to forcing water in that way: flooding, bank erosion, and a wider, shallower summer creek bed with higher water temperatures unsuitable for nurturing new life.”

They began by planting willows and cottonwoods along the banks, and over a period of 18 years, experimented with an array of engineering techniques to stabilize what was considered one of the worst erosion problems in the county. Many of those early efforts failed, but eventually, Chris came up with a system to build jetties, or “nick points” to slow the creek in flood. The jetties were planted in fast-growing riparian trees and formed the basis for what would eventually become the flowform structure that enabled meander to return to the creek. Now the water would hit a berm, follow the curve, hit another berm, and follow the curve, depositing silt and topsoil from upstream at the back of the jetties, and scouring out deep pools in front, effectively changing the flow of the water back to that of a healthy creek.

In time, silt and soil built up along the banks and native weeds and woody plants moved in to capitalize on the new territory, thus providing habitat for the life we witnessed. Now this half-mile stretch of Anderson Creek is monitored by county and state agencies for its remarkable come-back.

As Stephanie explained this, I exclaimed “That’s what RSF is trying to do with money! We are trying to change the flow of capital so that it flows to the businesses and organizations that are creating a deep, positive social impact.”

With our current financial system, if we speak of the flow of water as the flow of capital, we could say the flow has been interrupted; it has been bulldozed and channeled straight. As a result, the flow is muddy and opaque and the wealth is removed from its origins and deposited far downstream. When bad news hits, businesses lacking deep roots in the community are wiped out in a flash flood. As aggradation, or the displacement of sediments caused by repeat floods, alters geography resulting in shallow and dispersed water flow, a financial crisis erodes capital from communities and displaces it to far off investors resulting in less capital for local initiatives.

A healthy financial system can be seen as a healthy stream with its meander restored by the actions of the social finance community. Through direct lending, investing, and giving, RSF can contribute to restoring the natural flow of capital to businesses and organizations that encourage a healthy economy, environment, and people.

With a transformed financial system, we will directly invest in businesses and organizations with deep social impacts that encourage and support their communities. There will be diversity among these businesses and they will add value to their community by investing in people and practices that are good for society and the planet. The flow of capital will be patient and will settle into areas suitable for sparking new opportunities that, in turn, contribute back to the greater flow. More people will have access to and benefit from this flow, increasing the diversity of businesses and organizations. When bad news hits, it will not be a tragedy because our businesses and organizations will have established deep, healthy, community-based roots.

Now I ask you to ponder: What does it mean to you to transform the way the world works with money? How would that world be different than it is today? What needs to happen to make that change? And what can you do to contribute to it?